Mr Turnbull has been considering his future since Tony Abbott beat him by one vote in a leadership ballot in December.

He lost his leadership because he supported an emissions trading scheme to tackle climate change. Mr Abbott, who also once supported such an approach, dumped it as Liberal policy in his first act as leader.

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Malcolm Turnbull ... retiring from politics.

In a statement released this morning, Mr Turnbull rued that decision.

"I thank [former prime minister] John Howard for giving me the opportunity to serve as environment and water minister. With his support I was able to ensure that for the first time in our history the interstate waters of the Murray Darling Basin were placed under national responsibility," he said.

"However, I regret that another important reform begun during that time, the establishment of an emissions trading scheme, is no longer Liberal Party policy."

Mr Turnbull made his decision after being overlooked by Mr Abbott for the frontbench.

He indicated a willingness to return following the resignation of Senator Nick Minchin from the shadow cabinet.

But Mr Abbott knocked him back, saying it would be impractical, given Mr Turnbull's stance on the ETS.

Mr Turnbull will stay in his marginal eastern suburbs seat until the election.

Mr Turnbull announced the news on his Twitter account before releasing a statement on his decision.

His decision to quit means Joe Hockey remains the only viable leadership alternative in the event of a poor election showing by the Coalition

The Liberal Party will begin a preselection process quickly. Labor has been holding off from choosing a candidate until Mr Turnbull made up his mind. It, too, will move quickly to find a candidate.

Mr Turnbull entered parliament at the 2004 election.

He had been encouraged to postpone his decision until after the election.

If the Coalition went backwards under Mr Abbott, there was a chance Mr Turnbull’s leadership fortunes could have been revived.

His decision to quit means Joe Hockey remains the only viable leadership alternative in the event of a poor election showing by the Coalition.